“As such, it is overcast, from start to finish, by the heavy burden faced by any appellant in establishing that the judge's decision falls outside the discretion in relation to costs conferred upon him under rule 44.3(1) of theCivil Procedure Rules 1998 . For reasons of general policy, namely that it is undesirable for further costs to be incurred in arguing about costs, this court discourages such appeals by interpreting such discretion very widely.”
“Decisions on costs after a trial are pre-eminently matters of discretion and evaluation. Further, it is particularly important to bear in mind that a trial judge—especially after a trial such as this one—will have a knowledge of and feel for a case which an appellate court cannot begin to replicate. The ultimate test, of course, for the purposes of an appeal of this kind is whether the decision challenged is wrong. But it is well established that an appellate court may only interfere if the decision on costs is wrong in principle; or if it involves taking into account a matter which should not have been taken into account or failing to take into account a matter which should have been taken into account; or if it is plainly unsustainable.”
“[2] Mr Donnellan’s primary claim is for a declaration as to the existence of a partnership between him and Mr Ward and for relief flowing from the existence of that partnership. [3] Mr Donnellan is a mortgage broker, and Mr Ward is a property developer. The dealings between Mr Donnellan and Mr Ward and related parties on each side date back to 2007 and concern a number of properties in which Mr Donnellan and Mr Ward were involved. [4] In very brief summary, Mr Donnellan says that in 2012 Mr Ward expressly agreed to go into partnership with Mr Donnellan for the ongoing development of Creative House (a property Mr Ward had acquired through a wholly-owned company in 2003) and future projects, with their respective interests (including in Creative House itself) to be 25% (Mr Donnellan) and 75% (Mr Ward). [5] Mr Ward says that there was no such partnership and that the interests in Creative House are ultimately held by his wife, Mrs Ward (the Fourth Defendant in the Partnership Proceedings), his former girlfriend, Ms Dorobat (the Fifth Defendant in the Partnership Proceedings), and a Panamanian company, Ebonair Investment SA (“Ebonair,” the Third Defendant in the Partnership Proceedings). [6] It is common ground that a number of the flats in Creative House are held by Mr Keane, a friend of Mr Donnellan, and by Ms Howard, a former girlfriend of Mr Donnellan, as nominees. However, while Mr Keane, Ms Howard and Mr Donnellan say that Mr Keane and Ms Howard hold their interest in those flats for the alleged partnership, Mr Ward and Ebonair say that Ebonair is the ultimate beneficial owner of the flats. By Part 20 Claim in the Partnership Proceedings, Ebonair seeks declarations that Mr Keane and Ms Howard hold their flats on trust for it and related accounts and inquiries, including against Ms Howard's father, Mr Keen.”
“[10] By claims originally issued in the Wandsworth County Court, Mr Keane seeks possession of Flats 13 and 14 against (i) Luxap Limited (“Luxap”, a company which runs a business granting short lets of the flats in Creative House), (ii) CBA, and (iii) persons unknown. Ebonair was subsequently joined to the proceedings on its application and the claims were transferred, initially to Central London County Court, and then transferred to this Court to be heard together with the Partnership Proceedings and the Arbitration Claim. [11] The dispute between the parties in the Possession Proceedings is the same as one of the disputes in the Partnership Proceedings, namely whether Mr Keane holds the relevant flats as nominee for Ebonair as the Ward Parties say or, as Mr Keane contends, for the alleged partnership.”
“In the light of all the evidence, I have concluded that Mr Donnellan’s evidence about the alleged meetings with Mr and Mrs Ward and later with Ms Dorobat and Mr Ward, and his evidence about the statements said to have been made at those meetings by and in front of Mrs Ward and by Ms Dorobat, is not true and was made up to support Mr Donnellan’s claim to an interest in Creative House. I find that neither of those meetings happened and that the alleged statements were not made.”
“I find that the use of “either/or” trust deeds is an example of Mr Donnellan’s willingness to execute dishonest documents to try to avoid tax or legal requirements which he regards as unjustified or unduly technical.”
“…I find it is an example of Mr Donnellan being prepared to make assertions that are not true in order to bolster his case.”
“As I explain further below, I find that Ms Howard became involved in these transactions because she believed they would be profitable for Mr Donnellan and trusted that he would make sure she also benefited when he did so. Having thrown in her lot with him in relation to these transactions, she has kept to that position, instructing the same legal teams during the proceedings. I formed the view that Ms Howard regards her own interests in these proceedings as inseparable from Mr Donnellan’s. She is not an independent witness and I formed the view that her evidence also was not reliable unless supported by reliable documentary evidence or the inherent probabilities.”
“Looking at the overall picture, I have concluded that the Loan Agreement was created in 2009 or later (and the Deed of Variation was created after28 December 2010 ) in order to stand as evidence of a loan of£1.65m from Ebonair to Mr Ward in 2000 which was never in fact made, for the purpose of protecting (or hiding) assets from Mr Ward’s Joint Trustees.”
“In light of all the evidence at the trial, I have therefore concluded that Mr Ward has at least a beneficial interest in Ebonair. I do not conclude he is Ebonair’s sole beneficial owner: the evidence given (and the manner in which it was given) by Ms Hamieh leads me to conclude that she (perhaps in addition to others) also has some beneficial interest in the company, but I am satisfied that Mr Ward has a significant beneficial interest in Ebonair and is in a position to exercise at least significant control over its actions.”
“I have held above that Mr Keane holds the flats in his name in Creative House on trust for Ebonair (rather than for the alleged partnership). It follows that the possession claims he brings against Luxap, CBA and Ebonair should be dismissed, and Ebonair’s counterclaim for a declaration that it holds a 100% beneficial interest in the leasehold of Flats 13 and 14 is granted.”
“However, given the very substantial dishonesty I found on the part of Mr Ward and, therefore, the Ward parties in the way that they advanced their case and the effect that that had on the conduct … not only of the trial… but also the proceedings leading up to it and the proliferation of issues that caused … where the questions of the ownership and interest of Ebonair took up a very, very substantial part of the judgment, it seems to me that that it is not appropriate for Mr Ward and Ebonair to benefit from that dishonesty or to be paid in respect of costs they incurred in respect of that dishonest case.”
“… I have considered what the appropriate order is to make. It seemed to me that, on any view the Ward parties should not get the costs incurred in relation to advancing that dishonest case and that they should pay the Donnellan parties’ costs of that case and, taking both those into account, I am going to say no order as to costs.”
“… because it seems to me that the issues very much followed and formed part of the matters in dispute on the main claim for the same reasons.”
“… the decision reflects my assessment of the time taken up by and impact of the dishonest case on the trial and the proceedings overall – the dishonest case had a very substantial impact on the conduct of the trial (and the proceedings overall), being the subject of a very substantial part of the evidence and submissions at trial, and it very substantially increased the costs of the claim and the Part 20 claim. I decided no order as to the costs of the claim and Part 20 claim was more appropriate than (e.g.) to deprive D1-3 of their costs of the dishonest case and order them to pay the costs of the Claimant, the Third Party and the Fifth Party of that part of the case on the indemnity basis.”
“(1) The court has discretion as to— (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. (2) If the court decides to make an order about costs— (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order … (4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including— (a) the conduct of all the parties; (b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and… (5) The conduct of the parties includes— (a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction—Pre-Action Conduct or any relevant pre-action protocol; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended its case or a particular allegation or issue; (d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim; and…”
“(1) Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs— (a) on the standard basis; or (b) on the indemnity basis, but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.”
“The starting point for the consideration of any order for costs of an action is (CPR 44.3 (2)(a)) that costs should follow the event. It is from this point that the court will, in an appropriate case, consider the conduct of the parties (rule 44.3(2)(b)). There is no general rule that a finding of dishonest conduct by the successful party will replace the usual starting point. What is required is an evaluation of the nature and degree of the misconduct, its relevance to and effect upon the issues arising in the trial, and its tendency to create an unwarranted increase in the costs of the action to either or both of the parties. As Briggs J observed at para 19 of his judgment in Bank of Tokyo the full range of measures is available to ensure that the dishonest but successful party does not gain, and the honest but unsuccessful party does not lose, in consequence of the wrongdoing established.”
“At issue is whether the defendants’ dishonesty so infected the action that justice requires that they should recover no costs at all in successfully defending the action. For the reasons I have given, it cannot be said that the defendants brought the action on themselves or conducted the proceedings as a whole as an abuse of the process of the court. The judge placed weight upon the fact that Mr Neale was justified in proceeding to trial in order to clear his name. However, it must be remembered that the judge separately provided for the costs of that exercise. In my view, the judge’s starting point should have been an order for costs in the defendants’ favour subject to adjustments to ensure that they did not recover any costs which may have been incurred in advancing a dishonest case.”
“In order to reach a fair determination upon costs as between the claimants and Mr Nikitin and the Standard Maritime defendants, I must particularly consider (i) the extent to which the claimants were successful and (ii) the conduct of these parties before and after the proceedings were brought. I have already said that the claimants’ success was limited.”
“Balancing these considerations I conclude that I should not order any payment of costs as between the claimants on the one hand and Mr Nikitin and the Standard Maritime defendants on the other hand. They should all bear their own costs. This involves a major departure from the general rule, but I consider that it is justified particularly (i) because the claimants failed in their primary case, and (ii) because of the conduct of the claimants before and during the proceedings.”
“In my judgment, the judge committed no error of principle in arriving at the costs decisions he did in the three actions, including in the Intrigue action. …He decided to make no order in each action, because the considerations relating to each action led him to the view that was the fair way to dispose of the costs issues. In having specific regard, as he did, to the fact that the claimants failed in their primary cases, he no doubt had regard to the fact that that part of the litigation accounted for the greatest cost and effort. Whilst, as Mr Berry accepted, one might expect that claimants who nevertheless still achieved a material success on a fraud claim ought ordinarily to recover at least part of their costs, the judge took into account in deciding otherwise the claimants’ dishonest conduct of their cases. That was obviously a powerful consideration: courts do not look sympathetically on dishonest litigants. It may perhaps be, particularly bearing in mind the dishonesty there was also on the part of the Nikitin parties, that other judges might have been a little more lenient, and might have awarded the claimants at least part of their costs. But whether other judges would or might have done so is neither here nor there. No-one was in a better position than this very experienced judge, after 76 days of exposure to this heavy litigation, to make a decision as to what, if any, costs order to make. In my judgment, he made no error of principle in his approach to the order he made.” (Emphasis added)
“In the course of advancing his claim on behalf of the claimant, Mr Singh was found to have concocted false evidence about what had taken place at a meeting on 9 February. As against that, the court found that Mr Pandher and his wife, on behalf of the defendants, had colluded to fabricate false evidence as to the events of12 February 2016 . In particular, they had manufactured a false fax said to have been sent to their solicitors; and that they had done so deliberately, in order to bolster their false defence.”
“[51] It is necessary to stand back and assess the underlying nature and motivation of this litigation. I am satisfied that the claim was brought in order to avoid repayment of the£800,000 loan, and the outstanding month’s interest instalment. Although the claim arose out of a fraudulent misrepresentation on the part of the defendants, at all times the claimant knew that the representation had had no effect whatsoever on his decision to purchase the property. The basis of the claim was fundamentally false. [52] The claim was met, in return, in part with lies. But I have no doubt that those lies were spawned by the prosecution by the claimant of a false claim, expressly in order to evade his liabilities under the loan agreement. [53] I emphasise that this is not a case where a claim was brought to expose a fraud on the part of the defendants. The claim advanced was a dishonest one, which spawned a dishonest defence, but the claim was not brought to vindicate the claimant’s good name or to preserve its treasured reputation. This was a case entirely about money. What caused the costs to be incurred in the first place was the institution of this claim in order to avoid the claimant’s liabilities under the loan agreement.” (Emphasis added)
“The successful parties are the defendants. It would be wholly wrong to ignore that success by making no order as to costs, as suggested by Mr Holland. That would be to penalise unduly one of two dishonest parties and to ignore the fact that one of those two dishonest parties has succeeded on a claim that was fundamentally rooted in the prosecution of a dishonest claim by the unsuccessful party.”
“[56] If I look at the position solely underCPR 44.2 , and ignore the Part 36 offer, then I would have ordered the claimant to pay a proportion of the defendants’ costs. In fixing that proportion, I have to ensure that I not only disallow the defendants’ costs of advancing a dishonest defence, but also that I compensate the claimant for its costs of establishing that dishonesty. I must also bear in mind the need to impose a costs sanction proportionate to the gravity of the defendants’ misconduct but also proportionate to the dishonesty of the unsuccessful party which has led to this litigation. [57] I do not consider that it would be sufficient simply to disallow an indemnity basis of assessment of the costs in the defendants’ favour and simply to order an assessment of the costs on the standard basis. That would not sufficiently reflect the consequences of the dishonest defence advanced by the defendants. In my view, there should be an order for costs in the defendants’ favour, subject to adjustments to ensure that they recover no more costs than would have been incurred in advancing an entirely honest case, and adjusted to ensure that the claimant does not find itself bearing the costs of resisting those parts of the defence that were dishonest. … [59] Doing the best I can, I have concluded that, ignoring the Part 36 offer, the appropriate order for costs would have been to require the claimant to pay 75% of the defendants’ costs. I do not consider that the position is affected by the contractual provision as to costs. So far as the second defendant is concerned, there is no contractual entitlement to costs in any event.”
“As to costs, in the ordinary way one would expect the judge to penalise the dishonest and fraudulent claimant in costs. It is entirely appropriate in a case of this kind to order the claimant to pay the costs of any part of the process which have been caused by his fraud or dishonesty and moreover to do so by making orders for costs on an indemnity basis. Such cost orders may often be in substantial sums perhaps leaving the claimant out of pocket. It seems to the court that the prospect of such orders is likely to be a real deterrent.”
“It seemed to me that, on any view the Ward parties should not get the costs incurred in relation to advancing that dishonest case and that they should pay the Donnellan parties’ costs of that case and, taking both those into account, I am going to say no order as to costs.”
“I accept that I hold the leases at Creative House as trustee for the partnership… You have confirmed to me that you will not look to me for payment of legal expenses and this will be deducted from your share… Your solicitor has advised me to obtain independent legal advice before returning this letter, and I have decided that this is not necessary.”